Sid Maher, 19 January 2016

The head of Australia’s corporate watchdog has criticised a “lack of robust competition’’ in the petrol market as unleaded prices fail to dip below a $1 a litre despite the lowest international oil prices in more than a decade.

Australian Competition & Consumer Commission chairman Rod Sims told The Australian he believed petrol prices had “further to come down’’, retailers’ margins were 6c or 7c a litre too high and international refiners’ margins were 20c compared to the usual 7c a litre.

“Clearly the market is not working as competitively as we would like it to,’’ Mr Sims said.

Analysis by the Australian Automobile Association shows unleaded petrol prices in capital cities are more than 18 per cent higher this year than in 2003, the last time international crude oil prices fell below $US30 a barrel.

CommSec chief economist Craig James said the average Australian price of unleaded petrol fell by 1.9c to 120c a litre last week. This came as the Singapore gasoline price, which is the key international benchmark for the Australian price, fell by 6.2 per cent in the same period to around its lowest levels in seven years.

Mr James said the outlook remained positive for motorists and would lift the spending power of consumers and businesses. “Much will now depend on margins — the gross wholesale margin and gross retail margin,’’ he said.

The NRMA predicts that Sydney’s unleaded prices could fall to as low as $1.05 at the lowest point of the current price cycle, while the RACQ predicts Brisbane ­prices will fall to about $1.06 at the lowest point of the cycle.

NRMA spokesman Peter Khoury said one of the factors working against a larger petrol price fall was the decline in the value of the Australian dollar against the US dollar. Every 1c fall in the Australian dollar added 0.9c a litre to the pump price.

RACQ spokeswoman Renee Smith said the Queensland ­motoring organisation wanted an ACCC investigation into petrol pricing in Brisbane and Cairns where prices were consistently higher than comparable interstate markets. The AAA analysis shows that in December 2003, the last time the European Brent crude oil spot price was below $US30 a ­barrel, petrol prices in Sydney were 88.7c a litre, Melbourne 86.3c, Brisbane 80.7c, Perth 90.2c and Adelaide 89.6c.

Retail prices yesterday were: Sydney 114c, Melbourne 111.2c, Brisbane 125.9c, Perth 114.7c and Adelaide 105.3c.

AAA chief executive Michael Bradley said he recognised that producing fuel incurred significant costs that were independent of fluctuations in the global oil price. “For example, the federal government’s fuel excise makes up a large and growing proportion of what we pay for every litre,’’ Mr Bradley said. “However, our analysis shows the significant reduction in global oil prices has not yet flowed through to the bowser as it has done in the past. And therefore motorists are probably right to be confused about the ­prices they’re currently paying,” Bradley said.

Scott Morrison said retailers would be expected to pass on lower world oil prices to consumers. “I think all Australians would expect that if the global oil price is going down then petrol prices should also and they will be watching that. We have already seen I think quite a significant fall in petrol prices.”

Extracted in full from The Australian.